Syncrude still expecting reduced rates in May and June -sources

(Updates prices, adds Syncrude declining to comment)

By Nia Williams and Catherine Ngai

CALGARY, Alberta/NEW YORK April 19 (Reuters) - The Syncrude Canada oil sands project has issued an update to customers reiterating that it expects to run at reduced rates in May and June, two trading sources said on Wednesday.

The update said there was no change to Syncrude's most recent forecast that it will produce 5.3 million barrels in May and 6.6 million barrels in June, the sources said.

The plant in northern Alberta has capacity to produce 350,000 barrels per day, nearly 11 million barrels per month, but cut production in April to zero after a fire in March that damaged the facility and forced Syncrude to bring forward planned maintenance.

A spokesman for Syncrude declined to comment.

Traders said production rates for May and June were expected to be lower even before the fire because of the scheduled turnaround, but the outages still sent synthetic crude prices surging higher in recent weeks.

Light synthetic crude from the oil sands for June delivery last traded at $2.00 per barrel over the West Texas Intermediate benchmark, according to Shorcan Energy brokers, weakening from Tuesday's settle of $2.35 per barrel over WTI as market players looked ahead to production ramping up.

There were no trades in synthetic barrels for May delivery, which settled at $2.50 per barrel over WTI the previous day.

Volumes were thin as the Canadian crude market is outside a 2.5-week-long trading window, which lasts from the first of the month until the day before pipeline nominations are due, in which the bulk of transactions take place.

Western Canada Select heavy blend crude for June delivery last traded at $10.70 per barrel below WTI, having settled at $10.80 per barrel under the benchmark on Tuesday. (Reporting by Nia Williams and Catherine Ngai; Editing by Chris Reese and Bill Trott)